Hi! Today you can find me at Modest Money talking about how to crush your debt by earning more. I was also on Joe’s Stacking Benjamins podcast to discuss retiring abroad, which was a lot of fun although I am far from a radio pro like Joe is!
As you may know, I own a 3 bed flat in the UK. Each of the three rooms is individually rented to a young professional. Generally, people stay for a year or so, and then move on to live on their own, although I have had two tenants who stayed for three years. That is a landlady’s dream. Move the tenant in, cash a cheque for three years, and you will be sad when they leave.
The best part is that in the almost five years that I have owned the property, I have never had more than a week of vacancy between tenants. All of it managing the property from overseas. Even last month when I had to deal with both a tenant moving out, finding his replacement, and a broken washing machine. Here are a few tips to keep your cool while managing your rental.
Set a fair price
We all want to make crazy returns from real estate, but if you price too high, you won’t get tenants, if you price too low, you will get any kind of tenants. You want to be right in the middle, at an attractive price that won’t make people want to move out after three months because it is too expensive. Research your competition and test the price online, adjusting your ad depending on the number of answers you receive.
Say no
If you don’t feel the person, just say no. Letting someone in will get you a month deposit and a first month of rent, but if they burn the place down, that won’t be much of a consolation.
What I do with my tenants is have them conduct the viewings for potential roommates. Sure, they do me a favor by doing so, since I am not even in the country, but I also ask that they have a chat with the person to make sure they all get along. I prefer to wait for the right person, and if the tenants have vouched for that person, then they will be responsible should things not work out.
Get insurance
I used to own a property in Paris, that was a nightmare, the tenant died, his widow refused to leave or pay rent and in France it takes 18 months to evict someone. Thankfully, I had insurance and the rent was covered. Companies like CIA Landlords Insurance can help you sleep better at night knowing you would be covered should something happen. If you are getting contents insurance for your things, make sure the tenants know it doesn’t cover their personal belongings.
Automate
All my bills are paid automatically, and all tenants make an automatic transfer to my bank account with the rent money on the first of the month. So if I am traveling or just busy, I don’t have to remember paying the TV license. Nor will they be left without electricity. It makes life much, much easier.
Have a go to person
I used to live in that flat so when I moved out and rented what used to be my room, my roommates stayed around, and they were happy to give me a hand, forwarding my mail or letting the plumber in when the heater would act funny. It is important that you can trust your tenants, and having a go to person you know will be responsive with emails or phone calls is key. Now all the roommates I knew moved out but I still have a person I can count on. I know if something breaks they will first try to fix it before they call me to buy a replacement.
Do you own rental property? Who takes care of it?
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It’s fantastic that you’ve had tenants for so long! That makes life so much easier. It helps that the rental market in the UK is absolutely insane right now, so they are probably willing to stay renting from you even longer.
I have a rental five hours away from where I currently live. Thankfully I know our tenants very well (they’re family), and so far it has been easy-peasy. I am not naive enough to think it will necessarily stay that way, but since it has been only four months, it has been running smoothly. If I need someone to stop by to help with something, my parents live 20 minutes away and my Dad is super handy. Otherwise, I told the tenants that just let me know and I will arrange it.
All of my bills are also automated – all from a separate account from my personal money so that nothing gets messy if anyone ever wants to look at the finances. All-in-all it has been working well. We shall see how it looks five years down the road, but I’m happy with the situation for the time being. 🙂
That is great you have someone almost on site in case something goes wrong. When the heater broke the week between Christmas and New Year I was a bit lost but there was nothing money can’t fix. It still was cheaper than if I had to travel over there to have a look.
My partner and his brothers own a rental property downtown. They invested a good chunk of their time and money renovating the house to make it rentable. It’s in a great area, close to restaurants and bars and close to the local university.
That should do for a very high occupancy rate. I like student contracts because renting by the room brings in more money and you can throw them out easily if they turn out to be a nuisance.
Great tips. Managing rental property from afar can be a nightmare when things go wrong. Therefore, taking a small hit on yearly increases in rents etc should be welcomed in exchange for very good long term tenants.
Enjoyed your interview on Joe’s show as well. Things really sound fun (albeit a little challenging) out in Guatemala.
Mostly fun! Glad you enjoyed it.
Pauline,
I’m a huge proponent of real estate rentals, although I don’t think I could manage from afar. I always set my rentals 5% lower than the market to get a higher caliber of tenants, all of my tenants have been great.
Who signs the lease for you when a tenant moves in. Do you do it electronically?
Yes, they print and scan back the contract to me then I do the same and scan back to them. I have never kept a deposit so I imagine actual tenants reassure the new ones about me being fair with their deposit and fixing things around the house.
It’s so great that you’ve had such success with your rental property so far. How do you ensure that it’s clean between tenants and that there’s no damage? I suppose there is always property managers, too. That might make it a bit easier.
Property managers are really expensive in the UK, 20% or more is common. So I choose to use trust instead. As I am renting three rooms individually, when one person moves out, the other two confirm that the room was left clean and the key was given back, otherwise I ask those two to clean and pay them a cleaning fee that I deduce from the deposit of the tenant who left. It only happened once, the other tenants were really respectful. For broken items I rely on trust, I haven’t gone there in a couple of years so I imagine a few plates or glasses are missing but nothing out of the ordinary wear and tear. Once I paid a tenant to clean the carpets, she rented a steam vacuum and did the job, I offered to send a company over or give her the money and she did it instead.
Does your friend act as the on site contact/manager to actually meet new tenants and hand over keys and such? It’s great that you don’t let your rental property dictate where you live.
When I was renting property, I would always post a slightly higher than market rate. This weeds out many the less desirable tenants, and leaves room to be negotiated downwards if I find a particularly great candidate. Then once they’re in, I don’t raise the rent. The market rate almost always increases, so as time goes on the better the deal becomes and the more likely they are to stay. Less turnover, happier tenants, higher long term returns.
Self-reinforcing, virtuous cycle for all involved.
These are great tips of advice. Renting to anyone can be a stressful situation, but with the tips you provided, it should help make the process easier and more efficient. Thanks for sharing!
Managing a rental property from the distance is not an easy task. I am a real estate agent and I noticed some property owner ti facing this problem. I think I have found some useful tips from this article. So I’m gonna save this. Thanks for this importent post.
I went through this situation several times (I have 4 rental properties). Luckily for me, for all but 1, I had friends and family in the area.
Therefore, I’ve been looking for a solution because it does get kind of risky managing from far away. That’s when I stumbled across iPsylancer and they claim to have all the resources necessary for long distance management. I hope that’s the case because I’m pretty sick of these property managers. My tenants barely call me, and if I were to hand this property over to a manager, I would be paying each month for absolutely nothing.
Incredible tips. Overseeing investment property from far off can be a bad dream when things turn out badly. In this manner, taking a little hit on yearly increments in rents and so on ought to be invited in return for good long haul occupants.
Inconceivable tips. Administering speculation property from distant can be a terrible dream when things turn out severely. In this way, taking a little hit on yearly additions in rents thus on should be welcomed in kind for good whole deal tenants.
I am so grateful for this rundown! We are purchasing a few condominiums in a resort region and also putting resources into a business building. We need to discover an administration organization for both since we presumably won’t move out there for no less than a year, and I didn’t think there would be administration organizations that lone did business or just oversaw private. This rundown is exactly what I required!
A useful rundown to how to manage a property at a distance.
I really like the insurance idea. I personally did not know that insurance of that kind existed to be honest. That is something I will need to look into asap. Thanks for sharing!
Your 5 year streak is a real encouragement to future investors. Going no more than a week without a tenant in that span of time is a nice treat.
Thanks for the handy tips Pauline! I have recently invested in some properties in the West Midlands with the help of Loveitts and I’m eager to rent them out, so all be using all the points above!
This is amazing advice. I think if you can do the right things managing a rental property can really pay off. It’s great you have such a process to get the right tenants too!
Managing a rental property from the distance is not an easy task. But we are here to help!
Whatever level of experience your consultant has, you should keep your budget in mind when speaking with different firms.
Employing a manager is the best way to manage properties from a distance. Otherwise even the smallest of problems can become a huge headache
My parents want to get a few income properties soon and they are sure how to manage them. I liked that you pointed out that setting a fair price for the property will help attract more people to the property. It does seem like it would be smart to also have a good lease agreement in place as well.
Hey, great post!!! I prefer to wait for the right person, and if the tenants have vouched for that person, then they will be responsible should things not work out.
The best way to manage the rental property from distance s to hire a reputed property management firm. Such professionals have in-depth knowledge in such field and could provide proper assistance for the management of the property. Certain important aspects should be taken into consideration while hiring such professionals. Besides, such professionals act as an interface between the tenant and the landlord.
Hi.. awesome tips shared by you, these points to manage good rental property.
Thanks for sharing your experience, I liked it!!!